In face of macro uncertainty, ER&D sector witnesses leadership churn

As the sector braces for the fallout from tariff wars, demand uncertainty, and slowdown in discretionary spends, at least eight ER&D services firms have seen CEO changes this year

The engineering research and development (ER&D) segment is witnessing a leadership churn as the sector braces demand uncertainty due to a slowdown in discretionary spends in the auto sector and the global chaos being driven by the current tariffs announced by the US government.

 

Since the beginning of this calendar year, the sector has seen leadership changes in almost half a dozen firms, due largely to macroeconomic headwinds and uncertainty impacting the tech sector in general and the ER&D sector as auto and manufacturing sectors pause discretionary spending.

 

Pareekh Jain, founder of Pareekh Jain Consulting and ERIIT, believes that 2025 is set to be a year of CEO changes in engineering. “Over the last couple of years, when the market environment was tough for IT, there were many leadership changes in IT service providers. Now, the market is becoming challenging for engineering service providers due to geopolitics, industry slowdowns, and the adoption of new technologies, including AI,” he explained.

 

Prominent firms that have seen these changes include Cyient, GlobalLogic, Virtusa, Xoriant, Akkodis, Axiscades and AFRY. Interestingly, five of these six firms have appointed an outsider to take the reins of the company for their next stage of growth.

 

“Bringing in outsiders indicates a broad dissatisfaction from directors with the stalling growth of these companies and a lack of willingness to promote from within,” says Phil Fersht, chief executive officer (CEO) of US-based IT advisory HfS Research.

 

Jain says that boards of service providers, especially those that are not top performers, are advancing leadership changes to bring in fresh perspectives during these uncertain times.

 

Meanwhile, the automotive segment, a key sector within the ER&D framework, is facing its own set of challenges due to technology transition, evolving customer preferences, and the impact of realigning business to minimise the impact of regulatory and policy changes.

 

A Kotak Institutional Equities report suggests that limited clarity vis-à-vis the impact of each of these factors has led to a freeze in R&D spending. “Most OEMs have indicated some taper off in R&D investments from elevated levels in CY2024. This doesn’t bake in the impact of US tariffs. The extent of decline in R&D spending would vary by companies depending on the extent they are shielded from the tariffs,” said the report.

 

At the same time, leaders, particularly in mid-tier companies, are actively seeking new opportunities in this evolving business environment.

 

“The ER&D space has hit a slowdown over the last year and the current volatile macro-economic climate is slowing decisions with the threat of looming tariffs and economic uncertainty,” says Fersht.

 

He added that the new CEO appointments are generally a knee-jerk reaction to change up the leadership style and ‘appease short-term minded investors’, as opposed to making the painful fundamental changes that are needed to evolve the delivery model, namely retraining talent to support real artificial intelligence transformation. 

Company	CEO	Desig	Appointment
GlobalLogic	Srinivas Shankar	CEO	Feb 3, 2025
Cyient	Sukamal Banerjee	CEO	Feb 19, 2025
Xoriant	Rohit Kedia	CEO	Feb, 2025
Virtusa	Nitesh Banga	CEO	Feb 3, 2025
Akkodis	Jo Debecker	President & member of group executive committee	April 22,
Axiscades	Alfonso Martinez	Group CEO	January 20, 2025